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Thomas Gallatin / January 5, 2022

COVID Creates Office-Space Conundrum

Has the coronavirus pandemic permanently changed America’s commuter business model?

Has the COVID pandemic permanently altered one of the long-enduring staples of the American business landscape, the office commuter model? Generations of Americans have grown up with the near-universal assumption for the middle class that working included the reality of leaving home and commuting to an office somewhere in an urban environment in order to work. So ubiquitous has been this working reality that few seriously questioned it.

Even with the dawn and development of the Internet, few businesses and bosses embraced the concept of remote work, often believing it would lead to less productivity or interfere with employees’ ability to collaborate on various work projects. But then came the pandemic, forcing what was initially thought to be a temporary change of practice, as businesses kept going despite lockdowns by having their employees work from home. And as the lockdowns dragged on for weeks into months, both businesses and employees began to adapt to the changing workplace dynamic.

Business owners began to see the benefits of the new dynamic, specifically the cutting of costs by not needing to rent office space. They also realized that productivity often increased because workers spent more time actually working. Employees also saw benefits of working from home — primarily that avoiding the daily office commute saved time and money, affording more time at home with family. In many instances, employees with children had to stay home as their children’s schools were often also in a state of virtual educating.

The question is, just how permanent will this change be? Manhattan, for example, currently has nearly half a billion square feet of empty office space. When the pandemic finally ends, whenever that is, will employees suddenly flood back into offices, or will remote working have taken such a hold that much of the office space remains vacant?

“In New York we are witnessing, for the first time in a century and a half, the collapse of the commuter model,” observed The Wall Street Journal’s Peggy Noonan last year. “You had to be in the magic metropolis if you were going to be in the top of your profession — finance, theater, law, whatever. Many couldn’t afford to live in the city because it’s where the top, moneyed people were, so they lived in the near-outside — New Jersey, Long Island, Connecticut. … But now you don’t have to be in the city. The top people are everywhere. You can be pretty much home and be the best. The office towers of Midtown are empty.”

Almost a year later, many of those towers are still empty.

Indeed, Americans are moving out of high-cost-of-living cities such as New York City and thriving in much smaller, less costly and often more attractive parts of the country. Small towns all across America, which have long struggled as industry left and residents aged, may see a renewal. What may have long been a dream of many Americans, living in a smaller community away from the rat race of the urban life, is now not only a possibility but maybe fast becoming a reality.

But the question remains, what will become of America’s big cities like New York? What is clear is that things will not be the same after COVID.

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